AquireCo is going to acquire TargetCo for a total enterprise value of $18M. TargetCo- currently has...

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AquireCo is going to acquire TargetCo for a total enterprise value of $18M. TargetCo- currently has $10M in debt, which will remain in perpetuity after the acquisition. You can assume the following for TargetCo's business: cost of debt = 5%, T=0.30, FCF=$2M next year, long-term steady growth g-2.5%, unlevered cost of capital = 13%. What is AcquireCo's shareholders' gain from this acquisition? AquireCo is going to acquire TargetCo for a total enterprise value of $18M. TargetCo- currently has $10M in debt, which will remain in perpetuity after the acquisition. You can assume the following for TargetCo's business: cost of debt = 5%, T=0.30, FCF=$2M next year, long-term steady growth g-2.5%, unlevered cost of capital = 13%. What is AcquireCo's shareholders' gain from this acquisition?

Answer rating: 100% (QA)

To calculate AcquireCos shareholders gain from this acquisition we need to calculate the present val... View the full answer